VAT news and experiences Quality issues and classificaton By Dániel Makay HOTREC

1. VAT news and experiences Quality issues and classificaton By Dániel Makay HOTREC Hotels, Restaurants & Cafés in Europe CroTOUR – 10 May 2012

2. Contents: • Brief introduction to HOTREC • VAT and experiences • Quality issues at EU level • Classification – Hotelstars Union CroTOUR – 10 May 2012

3. I. Brief introduction to HOTREC • Represents hospitality industry at European level • 43 National Associations • in 26 European countries CroTOUR – 10 May 2012

4. I. Brief introduction to HOTREC European hospitality sector in the EU-27 1,7 million enterprises 9,5 million persons employed Compare! Automotive production: 2,2 millionChemical industry: 1,9 million 195 billion EUR value added Compare! Automotive production: 155 billion EUR Chemical sector: 194 billion EUR CroTOUR – 10 May 2012

5. I. Brief introduction to HOTREC European hospitality sector in the EU-27 99% of enterprises employ < 50 people these 99% make up 62% of value added 92% of enterprises employ < 10 people CroTOUR – 10 May 2012

6. II. VAT and experiences • Background: • Current situation with regard to VAT in the EU: • 1 standard rate of not less than 15% • 1 or 2 reduced VAT rates of not less than 5% • Reduced rates can be applied to inter alia to • Accommodation services • Restaurant services CroTOUR – 10 May 2012

7. II. VAT and experiences • Background: • Future of VAT in the EU ??? • Commission Communication on future of VAT • Announcement: • Assessment of the current VAT rates structure • Proposals by end of 2013 • Remember: Unanimity is required in the Council CroTOUR – 10 May 2012

8. II. VAT and experiences CroTOUR – 10 May 2012

9. II. VAT and experiences EU countries applying a reduced VAT rate to hotel services CroTOUR – 10 May 2012

10. II. VAT and experiences CroTOUR – 10 May 2012

11. II. VAT and experiences EU countries applying a reduced VAT rate to restaurant services in 2012 CroTOUR – 10 May 2012

12. II. VAT and experiences EU countries applying a reduced VAT rate to restaurant services in 2013? CroTOUR – 10 May 2012

13. II. VAT and experiences • Recent changes in rates in the EU countries • Lots of hikes and decreases in recent years, due to the economical and financial situation • Increases – mostly the need to consolidate budgets • Decreases – different reasons CroTOUR – 10 May 2012

14. II. VAT and experiences • Germany • VAT rate on accommodation services • 19%7% • Reasons: • Enhance competitiveness of accommodation industry • Results: • Investments of above one billion euro • Creation of thousands of new jobs • Increase of salaries • Germany • VAT rate on accommodation services • 19%7% • Reasons: • Enhance competitiveness of accommodation industry • Results: • Investments of above one billion euro • Creation of thousands of new jobs • Increase of salaries CroTOUR – 10 May 2012

15. II. VAT and experiences • Ireland (July 2011) • VAT rate on hotel and restaurant services • 13,5%9% • Reasons: • Revive the economy overall • Reduce prices • Boost tourism • Assessment after one year CroTOUR – 10 May 2012

16. II. VAT and experiences • Lithuania (January 2011) • VAT rate on accommodation services • 21%9% • Results: • 5,5% more employees • 21,2% more visitors to Lithuania • Restoration of competitiveness with neighboring countries • Nonetheless put back to 21% in 2012 CroTOUR – 10 May 2012

17. II. VAT and experiences • Finland (July 2010) • VAT rate on restaurant services • 22%13% • Reasons: • Lower prices • Increase employment • Results: • Prices dropped by around 5% • Production and employment grew by around 3% CroTOUR – 10 May 2012

18. II. VAT and experiences • Sweden (from January 2012) • VAT rate on restaurant services • 25%12% • Reasons: • Facilitate employment of young people • Boost tourism CroTOUR – 10 May 2012

19. II. VAT and experiences • Benefits realised with reduced VAT rates • Investments in the sector: other sectors benefit as well • Modernisation of the establishments • Enhancing competitiveness • Better price/quality ratio • Better employment conditions • More resources for training • Promotion of historical/culinary heritage • Equal treatment with other food products CroTOUR – 10 May 2012

20. II. VAT and experiences HOTREC calling on all European countries to maintain / introduce reduced VAT rates for the hospitality industry! CroTOUR – 10 May 2012

21. III. Quality • Commission initiative for a European Tourism Quality label • Expectations from the industry • Quick and unbureaucratic process • Strong commitment of the Commission for marketing • Reality: • Formal legislative proposal to be expected • Discussions in Council of Ministers and European Parliament • No clear commitment with regard to marketing • HOTREC’s existing system: • European Hospitality Quality scheme CroTOUR – 10 May 2012

22. IV. Classification CroTOUR – 10 May 2012

23. IV. Classification • Features: • 11 countries (for the moment) • 18.000 classified hotels • A market of 150 million inhabitants • Common sign • 270 common criteria (to 99%) • Avoiding mandatory architectural criteria • Free test classification • Acceptance by Online Travel Agents CroTOUR – 10 May 2012

24. THANK YOU FOR YOUR ATTENTION! www.hotrec.eu CroTOUR – 10 May 2012